Science & Technology
Science and Technology
Science and Technology
Tue, September 20, 2011
Mon, September 19, 2011
Consumer Borrowing Power Weakens for First Time in 2011
NEW YORK--([ BUSINESS WIRE ])--TheStreet, Inc. (Nasdaq: [ TST ]), a leading digital media company, released the August Credit Power Index (TM) showing that the consumer interest climate worsened for the first time this year after seven straight months of improvement.
"The national Credit Power Index may have hit bottom last month"
A sharp decline in certificate of deposit rates below already-historic lows reversed the positive consumer rate trend as measured by the [ Credit Power Index ], a metric produced jointly by TheStreeta™s [ Rate-Watch ] and [ MainStreet ] divisions to measure the asqueezea on consumers between the interest rates paid on deposits versus the interest rates charged on loans.
aThe national Credit Power Index may have hit bottom last month,a says Rate-Watch General Manager Rachelle Zorn, suggesting that the great consumer environment at banks may be coming to a close.
At the end of August, interest paid on 12-month CDs had fallen four basis points to settle at 0.43%, 36-month CDs dropped 12 basis points to less than 1%, and 48- and 60-month CDs saw similar big drops, according to Rate-Watch data used to compile the Credit Power Index. Rate-Watch maintains the worlda™s largest database of rates from more than 90,000 financial locations across the U.S.
The downturn in deposit rates meant that the Credit Power Index [ http://www.mainstreet.com/credit-power ] , which tracks the overall interest rate climate for consumers, went up for the first time since December 2010. The index is calculated by subtracting the interest paid on CDs at four terms from the rates charged on four loan products at corresponding terms. The lower the index, the more consumer-friendly the rate climate is. (See [ MainStreeta™s infographic ] for details on how the index is calculated.)
The good news revealed by the August index is that loan rates also fell, though not as steeply as deposit rates. The two short-term loan products in the Credit Power Index -- personal unsecured loans and 36-month home equity loans -- fell eight basis points each for the month of August, the latter settling at 6.54%. Meanwhile, 48-month auto loans and 60-month adjustable-rate mortgages fell only slightly, and now stand at 4.58% and 3.14%, respectively.
NOTE TO EDITORS: The full Credit Power Index database is available at [ www.mainstreet.com/credit-power ].
About Rate-Watch
One of the nation's largest providers of accurate, up-to-date rate information, this web site, [ www.rate-watch.com ], is relied upon by countless banks and credit unions, providing key data so they can set competitive rates.
About MainStreet
MainStreet provides personal finance tips and advice to help consumers grow their wealth and enhance their lives. By combining lifestyle news, commentary and financial resources, MainStreet is an engaging and fun site "where life and money intersect."
About TheStreet, Inc.
TheStreet, Inc. is a leading digital financial media company that distributes its content through online, social media, tablet and mobile channels. The Company's network of brands include: TheStreet, RealMoney, RealMoneyPro, Stockpickr, Action Alerts PLUS, Options Profits, ETF Profits, Chat on TheStreet, MainStreet and Rate-Watch. For more information on TheStreeta™s business, visit [ www.t.st ]. For financial and business news, actionable trading ideas, stock quotes and more, visit [ TheStreet.com ] via your web browser, follow TheStreet on [ Facebook ] and [ Twitter ], visit [ TheStreet.mobi ] from your mobile device and access TheStreet through all major tablet platforms.
